Supreme Court Extends Interim Order On Loan Moratorium Till 28 Sept

On Thursday, the Supreme Court virtually extended loan repayment moratorium till 28 September as it ordered an interim extension of loan moratorium till the date directing banks to not tag any loans as non-performing assets (NPAs) till further directions.

The apex court has now granted two weeks to the central government, Reserve Bank of India (RBI) and banks to come up with a concrete stand on their waving on interest charged on non-payment during the 6-month moratorium that ended on 31 August.

The three-judge bench took on record the submission made by the solicitor general representing the government and noted that an expert committee had been constituted to look into all the issues and action will be taken by the government.

The new hearing on the case will be on 28 September.

Background

The plea being contested is on the issue of the burden of interest chargeable during the loan moratorium granted as COVID-19 relief, which will be charged on interest and principal already due by customers during the 6-month period.

The plea argued that the aim of the moratorium circular was to provide relief on account of a loss of livelihood and income during the nationwide lockdown. If those suffering from the loss of income are unable to pay the monthly equated monthly instalments (EMIs), they surely can't be expected to be able to pay the interest dues, the petition said. The petitioner argued that the imposition of interest burden would have a devastating effect and would violate the right to life and right to livelihood.

Such an interest burden, as per the plea, defeats the very purpose of allowing the relief to customers.